Bank of England Warns of Global Currency Wars
By the time central banks warn about something, the practice has likely been going on for years. Today's case in point is BoE's King warns of growing currency competition
The head of the Bank of England warned on Monday that too many countries were trying to weaken their currencies to offset the impact of the slow global economy and the trend could grow next year.
"You can see, month by month, the addition to the number of countries who feel that active exchange rate management, always to push their exchange rate down, is growing," Mervyn King said in a speech.
The warnings by King, who is set to step down in July, echo those made in October by U.S. Federal Reserve Chairman Ben Bernanke, who delivered a blunt call for certain emerging economies to allow their currencies to rise.
The back and forth of monetary stimulus and foreign-exchange intervention has complicated any coordinated efforts to recover from the Great Recession.
"It is fair to say a recovery of a durable kind is proving elusive," King said in his speech.
Fielding questions later, he said he had "great confidence" that the United States will avoid the worst-case effects of the so-called fiscal cliff of automatic tax hikes and spending cuts due to come into force in January.
It "will find a way, if not avoiding going over the cliff, then hanging on by the finger tips" on the other side, he said.
It's fair to say the reason there is no recovery is that central bankers like King and Bernanke think competitive currency debasement will solve economic problems.
It won't, and that has been proven time and time again. Moreover, "fiscal cliff" avoidance is nothing more than "currency debasement" under the name "Keynesian stimulus".
The irony is King bitches about exchange rate management while encouraging Bernanke to do the same, and doing the same himself.
Source: Global Economic Analysis
About Michael Shedlock
Michael Shedlock Archive
|04/15/2015||France Considers Forcing Google to Disclose Search Algorithm; Too Much Satisfaction!||story|
|04/10/2015||Milestones in Bond Insanity: Mexico Sells 100-Year Bonds||story|
|03/27/2015||For Robots Only: Amazon Sponsored Contest; Soft Fingers Needed||story|
|03/24/2015||Fed's Bullard: Raise Rates or Face ‘Devastating’ Bubbles||story|
|03/19/2015||France Limits Cash Transactions to €1,000, Puts Restrictions on Gold||story|
|03/18/2015||IMF Fears “Taper Tantrum”; Rear View Mirror Discovery||story|
|03/16/2015||Wage Growth vs. Economic Theory||story|
|03/12/2015||Reality Check: How Fast Is China Growing? Global Recession at Hand||story|
|03/10/2015||From ZIRP to NIRP: Virtues of Germany vs. the Vices of Greece||story|
|02/24/2015||Uneven Housing Recovery in Pictures||story|